Hospital district buys Liberty-Dayton Regional Medical Center

Published 7:00 pm, Tuesday, August 3, 2010

Following months of continued negotiations, the Liberty County Hospital District #1 Board of Directors announced Aug. 3 that the district has purchased the Liberty-Dayton Regional Medical Center.

The announcement was made during a press conference held at the hospital’s board room. District President Bruce Stratton explained the process, which involved two purchases.

The first transaction bought the hospital land and building for $350,000 in a foreclosure sale on the steps of the Liberty County Courthouse at 10 a.m. on Aug. 3.

The second transaction purchased the medical licenses, Medicare number and critical access designation for $235,000. Both transactions were executed that day by Hospital District Vice President Paul Henry.

The hospital property and building are now formally owned by the Liberty County Hospital District #1. The licensing and operations aspect will be owned by the Liberty-Dayton Regional Medical Center, LLC. Both transactions were funded by the hospital district, according to Stratton.

Before the transaction, the hospital district held $1.5 million in its budget, which is collected from property taxes.

Stratton said that the sale had the blessing of Frontier Medical Group, which was the previous owner of the hospital licensing and operations. Frontier, a company with which the district has had a rocky relationship in the past over its management of the hospital and negotiations to purchase it, is now completely removed from the hospital operations.

“When the hospital district was formed, some thought it was just for indigent care,” said Stratton. “Some of us thought that it had a two-fold purpose of providing indigent care and saving the hospital. What we have been fighting for since 2009 has come to a head.”

The purchase by the district closes a difficult chapter in the hospital’s history which began last fall when the hospital was shut down by the county for nonpayment of property taxes and federal taxes.

Stratton, along with the hospital district board, pursued a long-term strategy to immediately reopen the hospital under temporary management agreements with state and federal government officials while negotiating with Frontier to purchase the hospital property and operations.

Several deals had been proposed and fell through during the process.

The last major plan pursued by the district involved an anonymous third party who would have paid off the approximately $3 million in back taxes and then sell the hospital to the district through a payment plan.

“This deal was much better than the one proposed in 2009,” said Stratton referring to the anonymous investor plan. “It is an accomplishment we have felt for months that would come close then slip away.”

Tom Rice, president of Southern Plains Medical Group, is the company that has been managing the hospital since the reopening.

“I’ve been doing this for 40 years and have never seen this happen,” he said. “If you asked me six months ago, I would have said it wouldn’t happen. Congratulations to the board of directors.”

Stratton said that the hospital employees were notified at 4:30 p.m. of the news shortly before the official announcement was made to the public.

“I think it’s a wonderful day for the community,” said Jo Anne Smith, hospital district board member. “I’m grateful that we have this for the community. We are glad the hospital staff stayed. We are very appreciative of them.”

The foreclosure sale did not settle the issue of all the taxes owed, according to Stratton, which is the next obstacle that the district will pursue.

The hospital still owes thousands in taxes to the county and to Liberty ISD. Stratton said that the City of Liberty is also owed money for utilities.

“We will work something out hopefully on a payment schedule,” he said.

Stratton explained that the U.S. Internal Revenue Service had a levy of $1,427,000 million against the previous owner, the Liberty-Dayton Community Hospital, L.P. He said that, while the IRS could have foreclosed on the property, they postponed foreclosure so that the district could work out a transfer deal with the previous owner to keep the hospital open.

Stratton said that the IRS was notified of the foreclosure sale and he said that he hopes that the $235,000 paid to the court will satisfy the delinquent tax amount.

The hospital district board now looks forward to paying off the remaining debts and creating a new vision for the operation of the facility.

“We have to work for the future to make this Regional Medical Center a place everyone can be proud of and a place to go instead of Houston or Beaumont,” said Henry.

“We’ve come a long way and we have a long way to go,” said Charles Kaemmerling, board member.